BANANA prices continue to be volatile, making specialist marketing and supply agreements, market timing and farm location increasingly important in securing profitable market prices.
Growers are increasingly trying to outdo each other, and are looking for that marketing edge which will attract premium prices for their fruit.
Consumers continue to demand high-quality, blemish-free fruit, and those growers who can provide that are reaping the rewards.
Although average prices are reasonably low, market range is wide, reflecting the premium for quality fruit.
A recent financial analysis of a Cassowary Coast farm revealed a net income of more than $15,000/hectare for the six-month period from July to December 2009.
This farm was situated near the coast in a reasonably elevated location and did not experience cold weather, allowing the bananas to maintain a deep yellow to golden skin colour, which is in demand from banana agents and consumers alike, giving it the ability to attract a premium price.
A recent purchase of a $2 million riverfront grazing farm near Innisfail for conversion to bananas is seen as a vote of confidence in the industry, particularly as the buyer was a high-profile banana agent with many farms and packing facilities in the north.
This purchase would tend to indicate that the threat of imports during 2009 seems to have subsided, with growers more confident in Biosecurity Australia enforcing strict quarantine measures.
The following is a summary of market trends and costs in recent years, and again confirms the need to be one of the producers that can attract a premium over the average market.
The production costs for cavendish bananas under normal conditions in North Queensland are typically estimated at about $17 per 13kg carton, consisting of about $11/carton in on-farm costs and $6/carton for transport, ripening and marketing.
These amounts include all variable costs of production relating to growing and marketing costs and outside labour.
The total cost of production inclusive of fixed costs such as equipment, interest and grower labour will be higher again.
Prices for cavendish bananas vary widely in any one year, and from year to year because of variations in the supply volume.
Cyclical downturns in prices and returns from overproduction are frequent.
For this reason, the year-to-year profitability of banana growing is extremely variable.
In any one year, there can be extended periods when the returns do not cover the cost of production, and other times when the price may be returning high levels of profit.
Consignments over the past two years have averaged just under 400,000 cartons a week, similar to the levels that existed immediately prior to the cyclone in 2006.
Price history over the period under scrutiny is exemplified by the Brisbane market averages,which showed average prices mostly in the $12-16 range per carton from January 2004 through to July 2005. There was also an upwards burst in prices from August to October 2005, during which average prices touched $25/carton.
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